FRANKFURT, July 3 The European Central Bank left
interest rates unchanged at record lows on Thursday, holding
fire while it assesses the impact of a barrage of measures
launched last month to pep up the flagging euro zone economy.
Following are comments by ECB President Mario Draghi at a
post-meeting news conference.
"The exchange rate is not a policy target, but it has become
important ... It is definitely very important for our outlook on
"When you look at reasons for low inflation today ... and
you compare it with say three years ago, you have two stages. In
the first stage, for about a year, year and a half, it was
mostly the oil price and food prices ... that contributed for
two-thirds to the following fall in the inflation rate from what
it was then and is today.
"But then after one year and a half (it) was the exchange
rate, because the contribution of energy decreased gradually. So
of course the two things can't be added because the contribution
of the exchange rate also works through the oil price and energy
"If one wants to have a published account of the meetings,
it gets a little complicated to have an account if you have
monthly meetings. It is easier to have it if you have (meetings)
every six weeks, because it gives space for producing the
account in a way that doesn't disturb the expectations for
further action and doesn't in a sense confuse the reception by
the markets about the previous action that has been taken."
"We certainly don't think that our job is finished, not at
all, not at all. I can restate that the Governing Council is
unanimous in its commitment to use also unconventional measures
after the Governing Council has just reiterated its commitment
to keep interest rates at present levels for an extended period
of time. So our job isn't finished.
"The issue is whether we should actually have each and every
month the expectation for action. Now keep in mind that the
expectation for action itself injects a certain market
behaviour, produces a certain market behaviour, which may have
nothing or very little to do with fundamentals. So it could
become a self-fulfilling expectation with consequences on the
"We are interested in ABS (asset-backed securities), as I
said, to heal the impairment of the bank lending channel and we
are interested because we want to channel lending into the real
economy and more specifically to the SMEs. So it should be real
ABS, as I said. No CDO squares or financial derivatives or
things like that in this concept.
"It should be simple. Simple as ... was securitization in
Europe until a few years, a couple of years before the crisis.
And actually the most complex structures were certainly not
generated in Europe. Banks and other European investors invested
into these structures, but they were not by and large originated
here, and it should be transparent.
"One of the problems with why - one of the reasons why
securitization actually got rightly a bad name was that some of
these products were so complicated that they could not be priced
correctly. And so that is why transparency is going to be a key
feature of this new concept."
NOT SYNCHRONIZING MEETINGS WITH FED
"We have no plan to synchronize our meetings with anybody
else really. So we just - we will have our new cycle and we
really - we are not going to think about other monetary policy
jurisdictions on this."
CHANGES TO ECB MEETINGS, MINUTES TO BE RELEASED
"The Governing Council today announces that the frequency of
our monetary policy meetings will change to a six-week cycle
from January 2015. The reserve maintenance periods will be
extended to six weeks to match the new schedule. Moreover, we
announce our commitment to publish regular accounts of the
monetary policy meetings, which is intended to start with the
January 2015 meeting."
MORE REFORM NEEDED
"To strengthen the foundations for sustainable growth and
sound public finances, euro area countries should not unravel
the progress made with fiscal consolidation, in line with the
Stability and Growth Pact and should proceed with structural
reforms in the coming years."
"A further downside risk relates to insufficient structural
reforms in euro area countries, as well as weaker-than-expected
RISKS ON THE DOWNSIDE
"The risks surrounding the economic outlook for the euro
area remain on the downside. In particular, geopolitical risks,
as well as developments in emerging market economies and global
financial markets may have the potential to affect economic
conditions negatively, including through effects on energy
prices and global demand for euro area products."
"Economic indicators, including survey results available up
to June, signal a continuation of the very gradual recovery in
the second quarter of 2014. Looking ahead, domestic demand
should be supported by a number of factors, including the
further accommodation in the monetary policy stance and the
ongoing improvement in financing conditions."
"The key ECB interest rates will remain at the present
levels for an extended period of time in view of the current
outlook for inflation. Moreover, the Governing Council is
unanimous in its commitment to also using unconventional
instruments within its mandate, should it become necessary to
further address risks of too prolonged a period of low
MONETARY POLICY STANCE
"The combination of monetary policy measures decided last
month has led to a further easing of the monetary policy stance.
The monetary operations to take place over the coming months
will add to this accommodation and will support bank lending."
"Inflation expectations for the euro area over the medium to
long term continue to be firmly anchored, in line with our aim
of maintaining inflation rates below but close to 2 percent."
"The latest information signals that the euro area economy
continued its moderate recovery in the second quarter with low
rates of inflation and subdued monetary and credit growth."
(EMEA Desk +44 207 542 4441)